Affordable & Liveable Property Guide 2nd Half 2020 - Canberra

Overview

Median property prices in Canberra Metro increased by 3.0% for houses to $845,000 from 2019 to 20201 and increased by 0.5% for units to $482,500. By comparison, from 2018 to 2019 the median house price in Canberra Metro increased by 2.4%, while the median unit price grew by 3.2%. Strong demand has continued to push prices upwards, resulting in the need to sacrifice affordability for liveability.

Canberra Metro recorded a healthy property price growth trend over the past five years, thus property owners can be confident in their asset’s ongoing value.

In the 2nd Half 2020 report, suburbs with below average rental yields for houses and above average vacancy rates for units had to be considered. This is consistent with market conditions, where COVID-19 has caused some challenges for investors. All chosen affordable and liveable suburbs experienced positive median price growth however, suggesting Canberra Metro is a resilient property market.

Table 1 highlights top suburbs in Canberra Metro based on price growth and total estimated value of projects commencing in the 2nd half of 2020.

Access to Market

The dominant proportion of homes sold in Canberra Metro across 2020¹ were in the lower-middle price bracket of $600,000-$800,000 (33.1%), while units recorded a dominant premium price point of above $600,000 (27.0%). There is a healthy spread amongst different price points, meaning that there is stock on the market for buyers at varying price points.

Affordable & Liveable Suburbs

To identify affordable and liveable suburbs premiums of 113% for houses and 28% for units were added to the Australian Capital Territory (ACT) average home loan, which were above those required to reach Canberra Metro’s median prices (71% for houses and -2% for units). This places the suburbs above Canberra Metro’s median prices which means buyers must sacrifice affordability to find highly liveable suburbs.

Considering all methodology criteria (property trends, investment, affordability, development, and liveability), Tables 2 and 3 identify key suburbs that property watchers should focus on.

In September 2020, house rental yields in Canberra Metro were recorded at 5.0%. In the 12 months to Q3 2020, the median house rental price increased to $610 per week, while average days on the market declined by -22.2% (to 21 days).

In September 2020, Canberra Metro recorded a very low vacancy rate of 0.9%, well below both Sydney Metro (3.5%) and Melbourne Metro (3.8%). Canberra Metro’s vacancy rate has shown a declining trend since peaking in May 2020 (at just 1.3%) due to COVID-19, which confirms there is a healthy ongoing rental demand.

Combined, the two key indicators above confirms Canberra Metro’s investment potential, which should instill further confidence into those thinking of entering the market. 

Methodology

This affordable and liveable property guide for Canberra Metro analyses all suburbs within a 10km radius of the Canberra CBD. The following criteria were considered:

• Property trends criteria – all suburbs have a minimum of 10 sales transactions for statistical reliability purposes. Based on market conditions suburbs have either positive, or as close as possible to neutral price growth between 2019 to 2020¹.
• Investment criteria – as of September 2020, suburbs considered will have an on-par or higher rental yield than Canberra Metro, and an on-par or lower vacancy rate.
• Affordability criteria – identified affordable and liveable suburbs have a median price below a set threshold. This was determined by adding percentage premiums to the Australian Capital Territory (ACT) average home loan, which was $494,490³ as of Q2 2020. Premiums of 113% for houses and 28% for units were added, which were above those required to reach Canberra Metro’s median prices (71% for houses and -2% for units). This places the suburbs above Canberra’s median prices which means buyers must sacrifice affordability to find liveable suburbs.
• Development criteria – suburbs identified must have a high total estimated value of future project development for the 2nd half of 2020², as well as a higher proportion of commercial and infrastructure projects. This ensures the suburbs show signs of sustainable economic growth, in turn positively affecting the property market.
• Liveability criteria – all identified suburbs have low crime rates, availability of amenities within a 5km radius (i.e. schools, green spaces, public transport, shopping centres and health care facilities), and an unemployment rate on-par or lower in comparison to the ACT average (as determined by the Department of Jobs and Small Business, June Quarter 2020 release).